How did the 2017 Tax Cuts and Jobs Act affect charitable deductions through 2025?
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Executive summary
The 2017 Tax Cuts and Jobs Act (TCJA) raised the cash‑gift AGI cap from 50% to 60% and nearly doubled the standard deduction, which sharply reduced the share of taxpayers itemizing and therefore claiming charitable deductions (for example, itemizers fell from roughly 30% to about 7% by 2025) [1] [2] [3]. Many individual TCJA provisions affecting charitable giving were set to expire after 2025, and the 2025 “One Big Beautiful Bill”/OBBB/OBBBA actions either extended, modified, or added new caps and rules that change donation incentives starting in 2026 [4] [5] [6].
1. How TCJA changed the math for donors
The TCJA did two things that changed donors’ after‑tax incentives: it increased the deductibility ceiling for cash gifts to 60% of adjusted gross income (up from 50%), while simultaneously nearly doubling the standard deduction and lowering marginal tax rates—moves that reduced the number of taxpayers who itemize and therefore can use the charitable deduction [1] [7] [2]. Lower marginal rates also reduce the per‑dollar tax value of a deduction, and analysts linked a drop in returns claiming charitable deductions to these changes [7] [8].
2. Measured effects on giving and itemizers
Reporting and philanthropy research show a big fall in the number of returns claiming charitable deductions immediately after TCJA (for example, returns claiming them fell from 34 million in 2017 to 15 million in 2018), yet total individual giving fell only slightly in inflation‑adjusted terms and by some measures recovered by 2023 [5] [7]. Other studies cited—such as Indiana University’s work—estimated a near‑term drop in giving of roughly $20 billion in the first year after TCJA, showing that behavioral effects were measurable but not uniform [8].
3. The 2025 expiry cliff and policy choices
Most individual TCJA provisions were scheduled to expire after 2025, creating uncertainty for donors and advisers; commentators and nonprofit groups warned that reversion could lower the standard deduction and restore pre‑TCJA rules unless Congress acted [9] [2]. Some advocacy groups urged permanent changes to protect donations, while others argued reforming or limiting the deduction could raise revenue if lawmakers extended other TCJA tax cuts [1].
4. The 2025 legislative response that matters for donors
Legislation signed in 2025 (referred to in sources as the One Big Beautiful Bill / OBBB / OBBBA) made several relevant moves: it permanently extended many TCJA provisions (including the larger standard deduction in some accounts), it kept the 60% AGI limit for cash gifts in place for 2025, and it introduced new limits that start in 2026—most notably a cap that values itemized deductions at 35% for taxpayers in the top bracket and other constraints on itemized deductions and thresholds [4] [5] [6]. Guidance for donors and advisers in 2025 urged accelerating large gifts into 2025 to lock in more favorable deduction value before 2026 rules take effect [10] [6].
5. What changed for high‑income donors beginning 2026
Under the new 2026 regime described in reporting, high earners in the 37% bracket face a 35% cap on the tax value of itemized deductions (so a gift that once yielded a 37% tax offset would be limited to 35%), and other caps and minimum thresholds apply to itemized charitable deductions—altering the effective subsidy for large gifts and changing rollover and planning considerations [4] [6]. Several advisory pieces recommended tactics such as front‑loading gifts, using donor‑advised funds, or employing qualified charitable distributions to navigate the shift [11] [6].
6. Competing perspectives and implicit agendas
Nonprofit and philanthropy groups emphasize that TCJA’s larger standard deduction “eliminated” the charitable deduction for a large majority of Americans and thus weakened giving incentives [3] [2]. Industry advisers and donor‑services organizations stress that the 2025 legislative fixes restored certainty and in some cases preserved donor advantages through 2025 while warning of new 2026 constraints that favor front‑loading gifts [10] [11]. Policy analysts such as the Bipartisan Policy Center frame reforming the charitable deduction as a possible revenue source to offset extending TCJA tax cuts—an implicit fiscal agenda that pits revenue ambitions against philanthropic incentives [1].
7. Limitations in available reporting
Available sources document TCJA’s 60% cash‑gift cap, the expanded standard deduction, the big drop in itemizers, the 2025 legislative changes and the new 2026 caps, but they do not present a single consensus estimate of the net long‑run effect of all changes on total giving through 2025; different studies and organizations emphasize different metrics [1] [7] [5] [8]. They also report recommended tactical moves for donors but do not provide individualized tax advice—taxpayers should consult advisors.
8. Bottom line for donors and nonprofits
From 2017 through 2025 the TCJA reduced the number of taxpayers who could claim a charitable deduction and lowered the per‑dollar tax value of giving, while temporarily raising the 60% AGI cash‑gift cap; the 2025 bills made many TCJA changes permanent for 2025 and introduced new caps and rules that take fuller effect in 2026, prompting year‑end 2025 planning advice to accelerate large gifts [1] [10] [4] [5].